Cost optimization model of second-hand product for extended non-renewing replacement-repair warranty

This paper proposes maintenance policy and length of maintenance period for second-hand products from the user’s perspective. When the second-hand product failure occurs during the basic warranty period, it is either replaced or minimally repaired. When the basic warranty period expires, the seller gives a discount to the user if he/she purchases the extended warranty for second-hand products. When the extended warranty period expires, the customer is in charge of the products’ maintenance for a fixed length of time and replaces the products at the end of such a maintenance period. In time of maintenance period, the second-hand product is minimally repaired at each failure. Such a maintenance model can be viewed as a generalization of several existing maintenance models which can be obtained as special cases. Following this maintenance scheme, the expected total cost of the mathematical model is constructed, and then the length of maintenance period is obtained so that the expected total cost is minimized for the user. Finally, numerical examples are introduced to illustrate the proposed optimal replacement strategy.